Hexcel Corporation (NYSE: HXL) is
a leading advanced structural materials company. It develops, manufactures and markets lightweight, high-performance materials, including carbon fibers, reinforcements, prepregs, honeycomb, matrix systems, adhesives and composite structures. The firm's materials are found in such diverse products as aircraft components, bullet-resistant vests, auto parts, golf clubs, window blinds and printed circuit boards. Customers include General Electric (NYSE: GE), Raytheon (NYSE: RTN) and Boeing (NYSE: BA). BP plc (NYSE: BP) is a major competitor.
The company surprised the Street earlier in the week, when it reported Q1 EPS of 23 cents and revenues of $344.5 million. Analysts had been expecting 20 cents and $314.1 million. The CEO noted that sales for commercial aerospace were up sharply, across the board. Management also guided FY08 EPS to the high end of the range 90-95 cents (93 cent consensus).
HXL shares
popped above 50-day, 90-day and 200-day moving average resistance on the news and then passed into a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with one "strong buy", four "buys" and three "holds". Analysts see a 25% growth rate, through the next year. The HXL PEG ratio (1.04), Price to Sales ratio (1.84), Sales Growth rate (21.90%) and EPS Growth rate (35.29%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 95% of the outstanding shares. Over the past 52 weeks, the stock has traded between $17.00 and $27.91. A stop-loss of $19.25 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
Nuclear power is on the comeback trail
Apple backs AT&T in continuing spat with Verizon
Closing Bell: The recession is still over, still... do you feel it?
